Jim Cramer said Costco stock is starting to look attractive again, especially after new analyst upgrades. Mizuho upgraded the membership retailer’s performance from neutral to outperform on Monday and raised its price target to $1,000 from $950, suggesting a 17% upside. Analysts pushed aside investors’ concerns about slowing member growth and matching sales growth, pointing out that about half of the company’s recent U.S. warehouse store openings were “fill-ins,” or new stores in successful markets to ease congestion and overflow. This is a dynamic that shows the strength of underlying demand, not weakness. This “insatiable demand is a quality problem,” Mizuho wrote in a note to customers. Costco stock rose 2%. It was a much-needed lift. The S&P 500 stock price rose 16%, but in 2025, the same stock fell 3%. One problem was the company’s high price-to-earnings ratio, typically typical of high-growth technology companies, leaving little room for error. So when Costco released its compound quarterly results on Dec. 11, showing that renewal rates were trending lower and customers were becoming more selective in their spending choices, the premium valuation for the company’s stock was no longer justified for many investors. This is why we decided to reduce our position in Costco on December 16th. Jim said given that Costco’s products are among the best in the retail sector, management will need to address two key factors in the coming quarter: lower renewal rates and slower spending. Costco is scheduled to release monthly sales data on January 7th and hold its annual investor meeting on January 15th. “Short-term I’m addicted to Costco, but long-term I love Costco and I always like to shop at Costco,” Jim said on Monday’s show “Squawk on the Street.” Costco’s stock chart is also starting to look more attractive, according to Kramer’s favorite chartist, Larry Williams, who lists Costco as one of his favorite establishments. “It was terrible, so I sat and listened,” Jim said during the investment club’s morning meeting. Looking ahead, Mizuho said Costco’s customer trade-up activity is geared toward higher-quality, more expensive products. The company also noted that the number of premium member additions in the first quarter was two to three times the total membership rate, which was the main reason it added the stock to its “Top Pick” list. Costco’s long-term story as a preferred membership retailer remains intact, and we expect it to have further upside potential going forward. According to Mizuho, the domestic renewal rate is over 90%, well above the average over the past 10 years, and if key metrics accelerate again, it could be the catalyst for a rally in Costco stock.
